The Development Finance Company of Uganda (dfcu) Bank has terminated the services of at least 250 out of 700 employees it inherited from Crane Bank as it completes the take-over of the latter’s assets and liabilities.
Dfcu late last month beat 13 prospective buyers to acquire Crane Bank at $30m (Shs105b).
Bank of Uganda in October last year took over the management of Crane Bank, at the time Uganda’s fourth largest bank, over under-capitalisation and posing a “systemic risk” to the financial sector.
The central bank, following a forensic audit under a statutory manager, sold it to dfcu four weeks ago.
“Whilst every effort has been made to integrate all former (Crane Bank) staff into the dfcu bank structure, it has not been possible to find suitable roles for all of them,” Mr Juma Kisaame, the bank’s managing director and chief executive, noted in a statement emailed to this newspaper on Saturday.
The massive lay-off is part of the continuing adverse outcomes of Crane Bank’s collapse and ironical turn of events just weeks after BoU gave job security assurances to the affected staff.
According to dfcu, the contract termination was effected to avoid duplication of roles in the combined bank organisation structure, mismatch in technology used in supporting operations and redundancy resulting from rationalisation of overlapping upcountry branches.
One of the affected employees said they were told to leave by the end of February, which is tomorrow. Each of them, the staff said, will be entitled to a pay equivalent to their three-month remuneration.
“It is disappointing to have lost my job, but what options did we have? I now have to go back to India,” another employee said.
The most affected are individuals that Crane Bank had employed as branch and mid-level managers and tellers.
The bank in which the Sudhir Ruparelia family held a controlling stake had unsustainable non-performing loan portfolio and bad debts, according to audit reports by the central bank which subsequently placed it on the watch-list in 2015.
Daily Monitor understands that Crane Bank had a bloated wage bill in part because some employees held the jobs irregularly without contracts while others lacked requisite qualifications, raising questions about the bank’s internal governance towards its last days.
Following an assessment of staffing requirements, dfcu determined that it was unnecessary and costly to keep all inherited Crane Bank employees.
In a January 31 statement, dfcu managing director Juma Kisaame noted that the acquisition of Crane Bank consolidated the former’s key role in driving growth of small and medium enterprises and expanding financial inclusion.
The job losses were not entirely unexpected. BoU last November fired senior Crane Bank officials superintending security for operations.
Other Crane Bank contracts that dfcu is reviewing, according to inside sources, include those for cleaning, security, supplies and other services.
The closure of about 23 branches by dfcu also means several former employees of Crane Bank would be out of jobs once the takeover is completed. Across the country, Crane Bank had 46 branches but in a district or area where there was a dfcu branch, they retained only a dfcu branch.
Dfcu says BoU and the Ministry of Labour had been notified about the terminations, but we could not independently confirm this.
Crane Bank troubles
The bank in which the Sudhir Ruparelia family held a controlling stake had unsustainable non-performing loan portfolio and bad debts, according to audit reports by the central bank which subsequently placed it on the watch-list in 2015. The Daily Monitor understands that Crane Bank had a bloated wage bill because some employees held the jobs irregularly without contracts while others lacked qualifications.